If a Corporate Bond Is Issued with a Coupon Rate

question 113

Multiple Choice

If a corporate bond is issued with a coupon rate that varies directly with the required return, theprice of the bond will

• A) be greater than the face value.
• B) equal the face value.
• C) be less than the face value.
• D) be greater than or less than the face value depending on how interest rates vary.

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Definitions:

Price

The amount of money required to purchase a good or service.

Quantity Supplied

Represents the amount of a good or service that producers are willing and able to sell at a given price over a specified period.

Demand and Supply Increases

A situation where both the demand and supply for a good or service rise, affecting its market equilibrium.

Equilibrium Price

The market price at which the quantity of goods supplied equals the quantity of goods demanded.